Characters from the Pixar Animation Studios Inc. movie "Finding Nemo" are shown in the lobby of Pixar headquarters in Emeryville, Calif., Tuesday, Jan. 24, 2006 after Walt Disney Co. announced it is buying ... more

Bay Area's skills shaping future of new media / Firms use high-tech expertise to show Hollywood the way

1 / 2

Back to Gallery

Walt Disney's acquisition of Emeryville's Pixar Animation Studios this week is a significant milestone in the Bay Area's emergence as a key power in the new media world.

As people increasingly go online for their information, their communication and their entertainment, mobile devices and high-speed Internet services are accelerating many changes in the entertainment industry. And Bay Area firms such as Pixar, Yahoo, Google, TiVo and LucasFilm are leveraging their technical expertise to show Hollywood the way.

"It's a very exciting time for the true joining of technology and entertainment," said Jeff Fino, co-founder of the San Francisco computer graphics firm Wild Brain and chairman of Mayor Gavin Newsom's Digital Media Advisory Commission. "I sense people are figuring out a good way to distribute all this content through alternative means."

At the heart of the convergence is Apple Computer's Steve Jobs, who not only pulled off the $7.4 billion sale of Pixar to Disney but brought a revolution to the music industry in recent years by persuading big music companies to sell their songs on his wildly popular iPod music player.

As Pixar's majority owner, Jobs now gets a seat on Disney's board of directors, and San Francisco media upstarts see him as the man who can bring vibrant change to a moribund Hollywood filmmaking industry.

Disney CEO Robert Iger is "a smart guy who's got a long-term view," said Carsten Sorensen, chief executive of the Orphanage, a movie company in San Francisco's Presidio that opened its own animation studios last year. "With Steve Jobs in the boardroom, he's got a guy who is willing to break the china. He's willing to change things that are maybe not so pleasant for the industry, but Steve Jobs has the track record to pull them off."

Signs of the change are popping up everywhere. Google and Yahoo unveiled new online video initiatives at the Consumer Electronics show in Las Vegas this month. Rupert Murdoch's News Corp. bought the parent of online music site MySpace for $580 million in July. Apple has sold 42 million iPods, and its iTunes Music Store accounts for more than 4 out of every 5 legally downloaded songs.

"You definitely feel a sea change happening in the industry," said Scott Stewart, founder of the Orphanage and chairman of its animation studios. "Steve Jobs has done a remarkable job in pulling industries that are resistant to change kicking and screaming into new markets that greatly expand their businesses.

"One wonders what Jobs being on the board of Disney will do," Stewart said, "how it will change the culture of Disney and how he will innovate.

Jobs will certainly have allies. Iger has spoken of the importance of technology and was the first media executive to put content on the video iPod, in this case hit shows like "Lost" and "Desperate Housewives" from Disney's ABC network. Sybase CEO John Chen and Packet Design chairwoman Judy Estrin, a former chief technology officer at Cisco Systems, are on Disney's board already, so Jobs -- who will become the company's largest individual shareholder -- won't be the first Silicon Valley mogul to take a seat.

Pixar was in the vanguard of what's been called "Hollywood North," an intellectual distinction that had been brewing in the Bay Area for years. It all started in the 1970s, when George Lucas and Francis Ford Coppola set up filmmaking operations in the area.

Lucas brought the element of technology, both with his Industrial Light and Magic's groundbreaking special effects in his "Star Wars" movies, but also as the incubator for Pixar and other technology companies. In recent years, companies like the Orphanage and Wild Brain sprouted.

San Francisco's Wild Brain has a five-picture deal with Disney's Miramax unit, and co-founder Fino said the Pixar deal "underscores what we've been trying to convince Hollywood of for a long time, which is that this is a good part of the business."

Indeed, distribution may be even more essential than creation. Pixar's John Lasseter has often emphasized that the storytelling is more important than the bits and bytes that went into making hits like "Toy Story" and "Finding Nemo."

Yet the distribution is moving even faster into a digital realm. Director Steven Soderbergh has raised eyebrows in Hollywood by agreeing to release six movies simultaneously in theaters, on DVD, and on an HDTV cable channel. Apple has sold 8 million downloads for its video iPods at $1.99 each.

And TiVo -- another Silicon Valley service that sparked fear and loathing in Hollywood because it allowed television watchers to skip commercials and record shows digitally for viewing any time -- is leading a "time-shifting" revolution that may be accelerated as video on computers improves. In essence, people can watch content when they want, not when the industry wants.

"The biggest unknown, that really is a Silicon Valley play, is distribution," said Brad DeGraf of Mill Valley, a media technology consultant and former director at Colossal Pictures. "Traditional television distribution is going to be completely changed in five or 10 years. No one is going to watch TV 'un-time-shifted.' "

"IPods are a terrific innovation, but even Steve Jobs knows that that party will end at some point," Alvarado said. "It all comes down to what kind of content is available and how will that content be delivered. IPods aren't going to be the flavor of the month for 20 years."

Where Jobs takes those trends is one of the big unanswered questions.

"Who knows?" said John Toole, CEO of the Computer History Museum in Mountain View. "Steve is such a creative guy. He is able to do things no one thought he'd be able to do.

"Who knows where all this will go?" Toole said. "It's exciting from a historical viewpoint. There's some great people doing some new things, and it's starting to scratch the surface."

Digital media by the bay

Pixar: Emeryville pioneer of computer-generated animation -- maker of "Toy Story" and "The Incredibles" -- was just sold to Walt Disney.

Apple: Steve Jobs has moved the Cupertino computer firm into entertainment with his innovative iPods and iTunes Music Store.

LucasFilm: George Lucas built a moviemaking empire in Marin County around his "Star Wars" franchise; he recently opened Letterman Digital Arts Center in San Francisco's Presidio.

PDI/DreamWorks: Redwood City filmmaker is Pixar's main competition, thanks to its "Shrek" movies.

Latest from the SFGATE homepage:

Click below for the top news from around the Bay Area and beyond. Sign up for our newsletters to be the first to learn about breaking news and more. Go to 'Sign In' and 'Manage Profile' at the top of the page.